Costs upon costs - taxes and penalties

06 Sep 2017



The old saying goes that the only things in life that are certain are death and taxes. In the modern horticulture industry, you could say that the only certain things would be death, taxes, and health and safety penalties. I say this because the first court decision has been made under the new Health and Safety Law that came into force last year: WorkSafe NZ v Budget Plastics Ltd.

The key facts of the case are that a Budget Plastics worker suffered a partial hand amputation while on the job, and Worksafe found that the machine in question was insufficiently guarded.

WorkSafe wanted the penalty sentencing to begin at $900,000; this is ten times higher than under the previous legislation. The Court decided that a lower range of between $400,000 and $600,000 was more appropriate and, ultimately, the company was fined $100,000; a fine greater than this would have been likely to put the company out of business. A further $37,500 in reparation and costs of $1,000 were also charged. Full details of the process that led to this decision can be found here.

The key points to take from this decision are:

- Penalties under the new Health and Safety Law are much higher – to the order of 10 times what they used to be.

- The court will not seek to put a company out of business, but $138,500 is still a significant amount for any company to pay, and will potentially be higher in the future.

The case serves as a valuable example of what insufficient health and safety practices can cost. Horticulture New Zealand has some excellent online tools for health and safety that were developed with WorkSafe, including a guide for visitors, practical tools, training resources, and managing contractors, all with the intention of preventing such incidents in the first place; you can access this material on the Grower Support section of our website.   

Now, to taxes; every cost that a business has to meet makes it less viable. Labour’s proposed new taxes on water, capital gains, and petrol are all costs that business will have to find the money to pay. Ultimately, it is the people that buy their products who will have to pay these additional taxes through increased prices at sale.

If you add to increasing taxes the potential of a high-cost health and safety incident, the viability of the business will be fundamentally threatened. But, more importantly, the business’ ability to grow and inject more funds into the economy will be put at risk. If enough businesses are unable to grow and invest, the economy will inevitably begin to decline. This in turn reduces the amount of tax being collected, and places increased costs on the Government meeting the costs of business failure and increased unemployment; one has to wonder what could possibly be gained, long-term, from these actions.

I think that, before a new tax is imposed, careful consideration needs to be given to the true consequences of additional taxes, and whether or not it will holistically be good for New Zealand.


- Mike Chapman, CEO